04
Mon, Nov
5 New Articles

Microsoft Adjusts Licensing for Small Business Users

Commentary
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Last Tuesday, Microsoft announced that it would launch a new licensing program early next year designed specifically for small and medium sized businesses (SMBs) that license multi-year contracts. The program will be called Open Value, and it permits some customers to spread out payments for specific Microsoft products.

The products that Microsoft will license through Open Value include the Windows operating system and Microsoft Office, the most popular infrastructural products in use by SMBs.

Open Value is a clear nod to SMBs who complained that Microsoft's enterprise licensing agreements put in place last July--also known as License 6.0--wouldn't work in their environments. License 6.0 required a significant up-front fee, based upon the number of users, plus the annual licensing fees over the three-year life of the license. Open Value, targeted to customers who have between 5 and 250 PCs, will ease the up-front burden and roll in the fees over the life of the three-year contract. This reduces the budgetary exposure that SMB IT managers have with their managers when the growth of the company's infrastructure is uncertain.

Refocusing on Small and Medium Sized Companies

By adjusting its licensing agreement to meet the realistic needs of the SMB marketplace, Microsoft is joining an increasing number of software vendors that have read the writing on the wall. These vendors are recognizing that the majority of 2002-2003 sales and revenues will not come from their traditional customer base of larger organizations. Here's how the SMB strategy plays out.

IDC estimates that the overall market for IT goods and services actually shrank in the past two years by over 3 percent, with the heaviest losses in storage equipment (down 10.6 percent in 2002) and networking equipment (down 7.6 percent in 2002). And though revenues are expected to climb in 2003, real double-digit growth is not anticipated until well into 2005.

By comparison, the share of SMB activity in the marketplace is actually growing. In the United States, SMBs will spend an estimated $135 billion in 2002. This is 30 percent of the total IT spending in the US. In addition, it's estimated that spending on CRM and ERP software will continue to double on an annual basis in the SMB niche.

This means that while the IT market has shrunk, it has exposed the IT needs of a larger proportion of SMBs, turning their needs and requirements into the targets that IT vendors must address.

How realistic is this strategy? Well, consider the following. Through the latter half of the 1990s, larger organizations were rebuilding their infrastructures to take advantage of the advances in technology and the evolution toward e-business initiatives. However, while a majority of the SMBs also took advantage of the lowered costs of productivity tools such as Windows desktop products, they were not economically positioned in their industries to really drive the e-business requirements for their products. Nor were these SMBs technically positioned to create the systems mechanisms to build the e-business infrastructure. SMBs--who are the natural suppliers and customers of larger organizations--had to wait for the standards for e-business interaction were put in place by the mega-corporations.

Now that larger organizations have set the standards--and have essentially shut down IT spending on infrastructural initiatives--SMBs are feeling more comfortable to begin responding to the demands. This translates into an increase in the number of smaller interfacing projects that are necessary to keep these businesses on target in their supply chains.

The Hidden Opportunity of the SMB Niche'

As a consequence, focusing on SMBs and their unique business needs has become a priority for many software and equipment vendors. Gone are the days when multi-million-dollar contracts with the largest companies are the overriding goals of vendors. Gone are the days of unbridled IT spending. In their place will be an extended period when vendors meet their numbers through multiple contracts with the smaller organizations who have tighter budgets and limited technical resources.

For instance, Oracle, Sun Microsystems, SAP AG, PeopleSoft, and Oracle have begun rebuilding product offerings in an effort to focus specifically on SMB market segment, primarily because larger customers are not spending so much. Many of these vendors have begun building channel partners--in a mode similar to IBM's Business Partner channels--to keep their cost of sales down.

Of course, IBM had already established a substantial Business Partner and channel mechanism, and it is continuing to focus on the SMB marketplace with the recent roll-out of its WebSphere Express series of middleware software tools. These tools are designed specifically to meet the budgetary needs of the smaller customer market niche. They're technically powerful enough to fill the e-business bill, but scaled to meet the budgets and resource requirements of the SMB.

Long-Term Market Patterns

How long will this focus on SMBs continue? Probably until the IT market rights itself over the next two years and larger organizations begin spending again on their next round of infrastructural projects. Of course, no one expects the return to the days of 20 percent IT spending, but IDC estimates that 10 to 12 percent growth is within reach over the next two years.

In the meantime, it's believed that small and medium sized companies with limited budgets and specific needs will raise the cost of sales for IT vendors by requiring an increased effort at salesmanship and modifying the conditions of sales through such mechanisms as licensing arrangements. Overall, this movement should lower the costs of IT products and services in the short run, and increase the opportunities for smaller companies to better compete by using the latest IT technologies.

 

Thomas M. Stockwell is the Editor in Chief of MC Press, LLC. He has written extensively about program development, project management, IT management, and IT consulting and has been a frequent contributor to many midrange periodicals. He has authored numerous white papers for iSeries solutions providers. His most recent consulting assignments have been as a Senior Industry Analyst working with IBM on the iSeries, on the mid-market, and specifically on WebSphere brand positioning. He welcomes your comments about this or other articles and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Thomas Stockwell

Thomas M. Stockwell is an independent IT analyst and writer. He is the former Editor in Chief of MC Press Online and Midrange Computing magazine and has over 20 years of experience as a programmer, systems engineer, IT director, industry analyst, author, speaker, consultant, and editor.  

 

Tom works from his home in the Napa Valley in California. He can be reached at ITincendiary.com.

 

 

BLOG COMMENTS POWERED BY DISQUS

LATEST COMMENTS

Support MC Press Online

$

Book Reviews

Resource Center

  • SB Profound WC 5536 Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application. You can find Part 1 here. In Part 2 of our free Node.js Webinar Series, Brian May teaches you the different tooling options available for writing code, debugging, and using Git for version control. Brian will briefly discuss the different tools available, and demonstrate his preferred setup for Node development on IBM i or any platform. Attend this webinar to learn:

  • SB Profound WP 5539More than ever, there is a demand for IT to deliver innovation. Your IBM i has been an essential part of your business operations for years. However, your organization may struggle to maintain the current system and implement new projects. The thousands of customers we've worked with and surveyed state that expectations regarding the digital footprint and vision of the company are not aligned with the current IT environment.

  • SB HelpSystems ROBOT Generic IBM announced the E1080 servers using the latest Power10 processor in September 2021. The most powerful processor from IBM to date, Power10 is designed to handle the demands of doing business in today’s high-tech atmosphere, including running cloud applications, supporting big data, and managing AI workloads. But what does Power10 mean for your data center? In this recorded webinar, IBMers Dan Sundt and Dylan Boday join IBM Power Champion Tom Huntington for a discussion on why Power10 technology is the right strategic investment if you run IBM i, AIX, or Linux. In this action-packed hour, Tom will share trends from the IBM i and AIX user communities while Dan and Dylan dive into the tech specs for key hardware, including:

  • Magic MarkTRY the one package that solves all your document design and printing challenges on all your platforms. Produce bar code labels, electronic forms, ad hoc reports, and RFID tags – without programming! MarkMagic is the only document design and print solution that combines report writing, WYSIWYG label and forms design, and conditional printing in one integrated product. Make sure your data survives when catastrophe hits. Request your trial now!  Request Now.

  • SB HelpSystems ROBOT GenericForms of ransomware has been around for over 30 years, and with more and more organizations suffering attacks each year, it continues to endure. What has made ransomware such a durable threat and what is the best way to combat it? In order to prevent ransomware, organizations must first understand how it works.

  • SB HelpSystems ROBOT GenericIT security is a top priority for businesses around the world, but most IBM i pros don’t know where to begin—and most cybersecurity experts don’t know IBM i. In this session, Robin Tatam explores the business impact of lax IBM i security, the top vulnerabilities putting IBM i at risk, and the steps you can take to protect your organization. If you’re looking to avoid unexpected downtime or corrupted data, you don’t want to miss this session.

  • SB HelpSystems ROBOT GenericCan you trust all of your users all of the time? A typical end user receives 16 malicious emails each month, but only 17 percent of these phishing campaigns are reported to IT. Once an attack is underway, most organizations won’t discover the breach until six months later. A staggering amount of damage can occur in that time. Despite these risks, 93 percent of organizations are leaving their IBM i systems vulnerable to cybercrime. In this on-demand webinar, IBM i security experts Robin Tatam and Sandi Moore will reveal:

  • FORTRA Disaster protection is vital to every business. Yet, it often consists of patched together procedures that are prone to error. From automatic backups to data encryption to media management, Robot automates the routine (yet often complex) tasks of iSeries backup and recovery, saving you time and money and making the process safer and more reliable. Automate your backups with the Robot Backup and Recovery Solution. Key features include:

  • FORTRAManaging messages on your IBM i can be more than a full-time job if you have to do it manually. Messages need a response and resources must be monitored—often over multiple systems and across platforms. How can you be sure you won’t miss important system events? Automate your message center with the Robot Message Management Solution. Key features include:

  • FORTRAThe thought of printing, distributing, and storing iSeries reports manually may reduce you to tears. Paper and labor costs associated with report generation can spiral out of control. Mountains of paper threaten to swamp your files. Robot automates report bursting, distribution, bundling, and archiving, and offers secure, selective online report viewing. Manage your reports with the Robot Report Management Solution. Key features include:

  • FORTRAFor over 30 years, Robot has been a leader in systems management for IBM i. With batch job creation and scheduling at its core, the Robot Job Scheduling Solution reduces the opportunity for human error and helps you maintain service levels, automating even the biggest, most complex runbooks. Manage your job schedule with the Robot Job Scheduling Solution. Key features include:

  • LANSA Business users want new applications now. Market and regulatory pressures require faster application updates and delivery into production. Your IBM i developers may be approaching retirement, and you see no sure way to fill their positions with experienced developers. In addition, you may be caught between maintaining your existing applications and the uncertainty of moving to something new.

  • LANSAWhen it comes to creating your business applications, there are hundreds of coding platforms and programming languages to choose from. These options range from very complex traditional programming languages to Low-Code platforms where sometimes no traditional coding experience is needed. Download our whitepaper, The Power of Writing Code in a Low-Code Solution, and:

  • LANSASupply Chain is becoming increasingly complex and unpredictable. From raw materials for manufacturing to food supply chains, the journey from source to production to delivery to consumers is marred with inefficiencies, manual processes, shortages, recalls, counterfeits, and scandals. In this webinar, we discuss how:

  • The MC Resource Centers bring you the widest selection of white papers, trial software, and on-demand webcasts for you to choose from. >> Review the list of White Papers, Trial Software or On-Demand Webcast at the MC Press Resource Center. >> Add the items to yru Cart and complet he checkout process and submit

  • Profound Logic Have you been wondering about Node.js? Our free Node.js Webinar Series takes you from total beginner to creating a fully-functional IBM i Node.js business application.

  • SB Profound WC 5536Join us for this hour-long webcast that will explore:

  • Fortra IT managers hoping to find new IBM i talent are discovering that the pool of experienced RPG programmers and operators or administrators with intimate knowledge of the operating system and the applications that run on it is small. This begs the question: How will you manage the platform that supports such a big part of your business? This guide offers strategies and software suggestions to help you plan IT staffing and resources and smooth the transition after your AS/400 talent retires. Read on to learn: